Recently, discussions about whether HyperEVM is dead haveclearlyintensified. Crypto KOL katexbt bluntly called it a massivefailure, stating that 13 out of 18 projects are a waste of time.
In our previous article, we wrote about trade.xyz achieving near-monopoly on Hyperliquid’s HIP-3 perpetual market; this article examines the other side of the platform—why its application layer has failed to take off.
Trading platformContinuouslyattracting capital, while the application layer is losing funds
Hyperliquid is an independent public chain powered by a proprietary high-speed mechanism, specializing in on-chain trading.
In the context of the overall crypto market correction in 2026, according to data from DefiLlama, the total value locked (TVL) across the entire DeFi industry declined from approximately $115 billion to around $70 billion, a drop of about 39%. While TVL on most blockchains contracted along with market conditions, Hyperliquid was among the few that remained relatively resilient.
This chain actually has two engines that share the same set of validators but have completely different roles.
The first is HyperCore, the trading engine. This is the high-performance on-chain order book exchange where perpetual contracts and spot trading are executed. It is not open to the public, and no one can build applications on top of it—all trading logic is hard-coded within.
The second is HyperEVM, an application engine. Launching in February 2025, it is Ethereum-compatible, allowing developers to build DeFi applications such as lending, staking, and decentralized exchanges. Applications on HyperEVM can remotely call transactions and liquidity from HyperCore, but all matching is still controlled by HyperCore.
ImageSource:RootData
Simply put, Hyperliquid locks its most profitable trading operations inside a closed engine and leaves the portion open to developers to HyperEVM.
The performance difference between the two engines is very large.
On the trading engine side, Hyperliquid accounted for more than half of the on-chain perpetual trading volume on most trading days in 2026. According to DeFiLlama, over the 30-day period ending August 10, the Hyperliquid exchange itself generated approximately $46.17 million in fees, and when combined with trade.xyz, which ranked second, total trading-related fees amounted to approximately $56 million.
The application engine side is significantly weaker. The total fees across all DeFi protocols on HyperEVM amount to less than $6 million, nearly ten times less.
The disparity in capital scale is also evident. According to the HRC Q2 2026 report, the total value locked on the Hyperliquid chain was approximately $1.44 billion at the end of the second quarter, declining further to around $1.2 billion by early August (including trading volume).However, the capital actually settled at the HyperEVM application layeraccounts fora relatively small share and continues to shrink.
According topublic data, HyperEVM has only about 8,000 daily active sending addresses, while Base had over 250,000 and Arbitrum over 110,000 during the same period.A platform that already dominates the perpetual trading space, andappearsto have no shortage of funding or users, has an application layer with only second-tier scale—this gap is hard to explain away as “the industry is still early.”
Looking deeper into HyperEVM, as of early August, after excluding assets brought in via cross-chain bridges, application funds were primarily consumed by two categories: liquid staking at approximately $978 million and lending at approximately $671 million.
Leading the list is the HYPE liquid staking protocol Kinetiq, with a size of approximately $780 million.USD.
Yetthe decentralized exchanges that should be thriving have regressed significantly. On other blockchains, DEXs are typically at the core of DeFi, with leading projects reaching tens or even hundreds of billions of dollars in value. On HyperEVM, however, all 44 related protocols combined amount to only about $221 million, with the largest native exchange platform reaching just tens of millions.
According to HRC, in Q2, PRJX accounted for 92.3% of decentralized trading volume on HyperEVM, HyperSwap accounted for 7.5%, and the remaining forty-plus platforms had negligible volume.
The trading engine continuously drains funds and attention, making it difficult for the application layer to retain projects or users.
Why isn't HyperEVM starting up?
This contrast isn't simply an operational issue—it's written into the architecture and choices of this chain.
1. Matching is monopolized by the core, making DEX redundant
The biggest selling point of HyperEVM is that applications can directly call HyperCore’s order book. This capability is powerful, but it simultaneously limits the range of applications that can survive.
Order matching and liquidity are exclusively handled by HyperCore, and the deployment environment is not open to the public. This means that third-party developers can only build on HyperEVM and then make reverse calls to access HyperCore’s liquidity.
As a result, the applications with a genuine here are concentrated in a few categories that rely on order books: liquid staking, lending, basis trading, and market making.
According to Token Terminal, Hyperliquid's daily active addresses on the entire chain have consistently remained at a high level of 60,000 to 70,000, with HyperEVM accounting for only about one to two tenths, while the vast majority of active users are concentrated on the HyperCore trading platform.
DEX loses its meaning here because order matching has already been accomplished by HyperCore using a far more efficient engine than an automated market maker; deploying a decentralized exchange on HyperEVM would be redundant.
2. Monopoly is not due to insufficient competition, but an inevitable result of the architecture.
According to the HRC report, shared liquidity eliminates the space for small platforms to survive on independent order books. When traders see the same asset listed in two places on the same interface, they immediately route their orders to the deeper order book, ,and relisting is almost instantly routed to a location with better liquidity.
This explains why decentralized trading on HyperEVM has converged toward a single operator, PRJX, and why the same phenomenon is observed at the trading layer. The listing layer of HIP-3 has converged to a single operator over five months, with tradeXYZ accounting for nearly all volume by July.
Permissionless entry and ultimate monopoly naturally coexist under shared liquidity. The high concentration at the application layer is a mathematical outcome of this architecture, not a result of insufficient competition.
3. The principle of fairness led us to shut down the distribution machine ourselves.
Another weakness of the HyperEVM ecosystem stems from Hyperliquid's consistent emphasis on fairness.
The official acknowledgment states that HyperEVM has been progressing slowly due to its commitment to the "no insiders" principle: no one was notified in advance, and no payments were made for integration or marketing.
The cost is that its development tools and ecosystem at launch were not as mature as those of other chains.
There's nothing wrong with upholding fairness. But a protocol that already earns millions of dollars in fees daily and holds vast amounts of funds and users is fully capable of supporting the application layer through grants, business partnerships, and marketing—without compromising fairness. Yet it chooses to do nothing.
At Hyperliquid’s current scale, “no insiders” has gone from an initial principle to an excuse for inaction. It has the resources to ignite its ecosystem—it simply lacks the will.
KOL @Ace_da_Book pointed out that this chain offers no incentives for builders and no kingmakers, yet still attracts high-caliber teams who believe in fair competition. HyperEVM is suited for teams that can integrate with HyperCore’s order book to tokenize RWA and high-quality assets, not for projects focused on attention markets.
However, from another perspective, this is also a harsh filter: without subsidies or narrative protection, projects are immediately exposed to experienced traders upon launch, and failurecomesquickly.
4. Writes across engines are not guaranteed to execute,the development experience remains awkward
The final layer of resistance comes from the development experience.
HyperEVM uses a dual-block design: frequent small blocks handle low-latency contract transactions, while larger blocks approximately every second settle with HyperCore. The benefit is speed, at the cost of contract operations and core matching occurring in separate stages and not being synchronized within a single transaction.
There are two channels between HyperEVM and HyperCore. The read channel uses precompiles, allowing contracts to directly read order book prices, positions, and balances—this path is smooth. The write channel uses a system contract called CoreWriter, which has been live on mainnet since mid-2025, enabling contracts to place orders and transfer funds through it to HyperCore.
The issue lies in the nature of this channel—it is not synchronous. After the contract calls CoreWriter, the EVM transaction completes immediately, while the actual core action is queued for execution in a subsequent core block and may silently fail due to insufficient margin, unfulfilled orders, or other reasons; in such cases, the EVM transaction does not roll back.
For developers, this means you can’t assume a one-step process like on Ethereum. To build a stable vault or lending application, you must break it into two steps: first issue the command, then later use a read channel to confirm whether the core operation succeeded, while also providing fallback paths for stuck states. These cross-engine pitfalls don’t exist in standard EVM development.
Therefore,the barrier to entry is quite high for general developers looking to migrate in. Those who do come are mostly teams already working around HyperCore liquidity, rather than developers seeking independent use cases.
Is HyperEVM's quietness a sign of decline, or another form of success?
The HRC report notes that this round of TVL decline is a structural adjustment. During the same period, the on-chain stablecoin supply quadrupled, while gas consumption and transaction volume both increased—indicating actual usage is growing. The contraction is limited to DeFi collateral trapped in leverage and LST cycles. Capital on Hyperliquid is increasingly being deployed for trading rather than farming.
This explanationbarelyholds up, but it恰恰 illustrates the problem: a so-called ecosystem reduced to nothing but trading and leverage cycles is itself evidence of failure, not another form of success.
Crypto KOLCain O'Sullivan saidthat critics are using the wrong framework. In his view, HyperEVM was never intended to be a general-purpose chain; it is a tokenization layer for HyperCore liquidity, serving as the gateway for value to enter and exit this ecosystem.Without this EVM compatibility, native USDC would not exist on HyperCore—the team’s decision to abandon Core vaults in favor of the EVM version further supports this.
However, even by his definition, HyperEVM’s value is entirely dependent on HyperCore,making it more like a programmable peripheral to a transaction engine than an independent, self-sustaining economy.
Defining HyperEVM as a tokenization layer might make sense, butalsoreveals that the team never truly intended to build a general-purpose ecosystem. Developers drawn in by the general-purpose narrative have been let down.
The apparent prosperity in the HyperEVM ecosystem was merely artificial heat built on leverage. Once the heat fades, the underlying foundation revealed is precisely the small circle of real demand centered around trading and order books.
Conclusion
Whether HyperEVM is truly dead may be the wrong question to ask. There is still real capital flowing on its chain, and high-value assets are actively in motion. However, it has indeed failed to develop the breadth and retention expected of a general-purpose application ecosystem.
Hyperliquid has devoted nearly all its resources and attention to its trading engine, locking matching and liquidity within a closed, high-performance system. This choice has given it a clear advantage in perpetual markets, while simultaneously relegating adjacent application layers to a secondary role.This is not an architectural inevitability—it’s an intentional trade-off.
More than a year has passed, and the costs are now clear: the trading side continues to attract capital, but the application layer fails to retain projects or users. Those that have survived are mostly financial applications centered around order books; truly independent, general-purpose use cases have hardly emerged at all.
Instead of continuing to argue whether it’s dead or not, let’s first ask a more fundamental question: What kind of chain are we actually asking Hyperliquid to become?